Bookmark 11-19-2014

Western Europe to Reduce LLDPE Output

Linear low density polyethylene (LLDPE) is the most versatile type of polyethylene. Large amount of this plastic are used in the production of films in particular. Global revenues generated with LLDPE amounted to USD 40.0 billion in 2013. A new study of the market research institute Ceresana expects global market value of LLDPE to increase by about 3.9% p.a. until 2021.

LLDPE is most commonly used for the production of films (figure: Ceresana)

The largest sales market is Asia-Pacific that consumed 11.3 million tonnes of LLDPE in 2013. An increase of another third of this amount is to occur in this region until 2021. Ceresana also forecasts high growth rates for the Middle East and South America. The markets for LLDPE in North America and Western Europe, on the other hand, will grow by only just above 1% per year. Yet growth prospects are still better than those for other types of polyethylene such as LDPE or HDPE.

LLDPE is most commonly used for the production of films. This sector accounted for about 81% of total demand in 2013. Flexible packaging films constitute the largest segment, followed by bags and sacks. Accordingly, in all regions the by far largest amount of LLDPE is processed using film extrusion. Other important applications are rigid packaging and construction products.

Shale Gas Boom in the US Drives Down Prices

The shale gas boom in the US has a significant effect on ethylene production and thus markets for polyethylene. The strong decline of prices for ethane has led to a number of new ethane crackers being built. Cracking ethane yields a higher amount of ethylene than does the cracking of naphtha or other feedstocks. As a result of these projects, production capacities for polyethylene in the USA are rising. Faced with increasing pricing pressure, several European producers have announced to either close their crackers or to change over to using imported ethane as feedstock. Western Europe is the only world region to reduce output of LLDPE in upcoming years as capacities will not be expanded and some facilities will be closed.